Used car sales sink 16.8 percent in April

Both used and new car sales continue to suffer the pinch of depleted trade with Brazil, among other factors.

Transactions down 3.88% during the first four months of the year, says CCA

Used car sales dropped 16.8 percent in April compared to the same month of 2013, as the automobile sector’s crisis dragged on another month.

Matched up to March, 3.7 percent more used vehicles had new owners, the Automotor Commerce Chamber (CCA) reported yesterday.

The used car sector had proven somewhat resilient in the face of the tax hike on luxury goods in January and the devaluation later that month. Although these developments only directly affected the prices of the top bracket of cars, auto makers eventually had to readjust the rates for lower costing vehicles as well.

With the cheapest new cars costing 100,000 pesos, many potential consumers spilled over in to the used market, with the sector’s sales having grown 0.77 percent in the first quarter of the year.

The inter-annual drops posted for the last two months appear to indicate that the spill-over effect has ended, and that struggling production and sales have begun to plaque both sides equally.

Up to the end of April, sales have now decreased 3.88 percent compared to the same four months last year.

“Our projections for the year in in terms of used vehicle sales remain at the same level as 2013,” CCA chamber head Alberto Príncipe stated defiantly in a news release.

Príncipe argued that “the drop in the sale of used cars, which has been felt on a monthly basis since the start of the year, has led to a readjustment of our structures to adapt to the market’s new reality, both for new and used cars,” adding that the spill-over effect has not yet ended.

“People who were saving money to buy a new car find it impossible today, so they opt for a semi-new car, not just because of the price, but also due to maintenance costs,” the chamber head continued.

Used car prices have risen between 25 and 30 percent so far this year, compared to the “80 to 100 percent seen in new car” rates, Príncipe added.

He also expressed optimism with regard to recovery for the new car market, saying that “the discounts currently on offer are very attractive.”

Up to the end of April, new car sales have dropped 18 percent on the same period last year, while dealerships have forecast a 40-percent plunge for this month.

One of the first car makers to take the leap in a bid to rectify the situation was Honda, which cut back prices by up to 13 percent for some of its vehicles.

With thousands of workers suspended at several of the countries’ auto factories last month, the sector’s crisis has been augmented by decreased levels of production, in turn accentuated further by a depleted trade balance with Brazil, the main destination for Argentina’s industrial exports.

Car output also plummeted during the first quarter of the year, with production dropping 16 percent compared to the same three months last year.

Brazil on the horizon

Logically the government has sought to address the root of the problem, new car sales and production thereof. Accordingly, Economy Minister Axel Kicillof and Industry Minister Débora Giorgi met with the heads of the Association of Automotive Factories (ADEFA) on Friday after news that General Motors was to implement a new round of suspensions.

“The government wants to move forward on a price agreement with car makers. At the same time, they want to decrease imports,” a source who took part in the meeting told the DyN news agency. “The main issue was to analyze how the Brazilian market is recovering from the crisis. Each company will present a report next week on how the crisis is affecting them.”

Car makers assured the officials they would abstain from suspensions as long as progress was made in moving upward the bracket for luxury cars to fall under January’s tax hike.

A new meeting with Brazilian officers will be held at the end of the month in Buenos Aires to try to reach an agreement over vehicle trade between both countries.

Negotiations will thus continue over the deficient yet pivotal auto sector after more bad data was confirmed last month, with exports from Argentina dropping 20.6 percent and imports plunging 27.3 percent.